Insurance Chapter 9
estoppel
Occurs when misleading actions of an insurance company agent result in the insured bind stopped from performing according to the provisions of the contract
Principle of Indemnity
The insurer agrees to pay no more than the actual amount of the loss
Principle of Utmost Good Faith
a higher degree of honesty is imposed on both parties to an insurance contract than is imposed on parties to other contracts
principle of reasonable expectations
an insured is entitled to coverage under a policy that she reasonably expects to provide and that to be effective exclusions or qualifications must be clear
contract of adhesion
insured must accept the entire contract with all of its terms and conditions
concealment
is intentional failure of the applicant for insurance to reveal a material fact to the insurer
unilateral
only insurer makes a legally enforceable promise
valued policy
pays the face amount of insurance if a total loss occurs
conditional
policyowner must comply with all policy provisions to collect for a covered loss
personal
property insurance policy cannot be validly assigned to another party without the insurer's consent
actual cash value
replacement cost minus depreciation
warranty
statement that becomes part of the insurance contract and its guaranteed by the maker to be true in all respects
representations
statements made by the applicant on the insurance application
Principle of Subrogation
substitution of the insurer in place of the insured for the purpose of claiming indemnity from a third person for a loss covered by insurance.
Four requirements of legally enforceable insurance contract
- offer and acceptance (of terms) -consideration (value parties give to each other) - competent parties (legal capacity) - contract must exist (for legal purposes)
who has interest
- owner of property - potential legal liability - secured creditors - contractual rights
Principle of Interest
the insured must be in a position to lose financially if a covered loss occurs
replacement cost insurance
there is no deduction for physical depreciation in determining the amount paid for a loss
aleatory
values exchanged are not equal
waiver
voluntary relinquishment of a known legal act
Four ways indemnity is enforced
- ACV -Principle of Interest - Subrogation - Other insurance Clauses
agent's authority
- expressed (specifically granted) - implied (perform incidental acts necessary to fulfill the purposes of the agency agreement) - apparent (third party lid to believe the agent is acting within the scope of appropriate authority)